Life Storage, Inc. (LSI) Q4 2020 Earnings Call Transcript

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Life Storage, Inc. (LSI)
Q4 2020 Earnings Call
Feb 23, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Life Storage Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Dave Dodman, Senior Vice President, Investor Relations and Strategic Planning. Please go ahead, sir.

David Dodman -- Senior Vice President, Investor Relations and Strategic Planning

Good morning, and welcome to our fourth quarter 2020 earnings conference call. Leading today's discussion will be Joe Sapphire, Chief Executive Officer of Life Storage; and Andy Gregoire, Chief Financial Officer. As a reminder, the following discussion and answers to your questions contain forward-looking statements. Our actual results may differ from those projected due to risks and uncertainties with the company's business.

Additional information regarding these factors can be found in the company's SEC filings. A copy of our press release and quarterly supplement may be found on the investor relations page at lifestorage.com. As a reminder, during today's question-and-answer session, we ask that you please limit yourself to two questions to allow time for everyone who wishes to participate. Please requeue and follow-up with any additional questions thereafter.

At this time, I'll turn the call over to Joe.

Joseph V. Saffire -- Chief Executive Officer and Director

Good morning. Thank you for joining this morning's call. I'd like to open my remarks by acknowledging our Co-founder and former Executive Chairman, Bob Attea, who sadly passed away in December from a short illness. Bob was a true visionary who guided sovereign into self-storage back in 1985, and he will be very missed.

So we are pleased to report fourth quarter and full year 2020 results that I believe Bob would be very proud of. As I think back to where we were in late March and early April last year, I cannot be more pleased with how our business has performed and how we are positioned as we begin 2021. In the early days of the pandemic, our priority was the safety and health of our roughly 2,000 teammates and more than 500,000 customers. This business remained with a keen eye on our core values, teamwork, respect, accountability, integrity and innovation. And I believe that our favorable operating results reflect that.

We grew adjusted funds from operations in 2020 by 5.9% despite the global pandemic. Operationally, we continue to maintain record same-store occupancy for this time of the year, 92.8% as of the end of January, almost 370 basis points higher year-over-year. I believe customers are attracted to our online rental platform and it's differentiated and innovative features such as tiered pricing. January represented the eight straight month, where we are roughly 30% of our move-ins, came via our self-serve platform. I'm proud that we were the technological leader and early adopter of the online self-serve channel.

Though we continue to see robust demand throughout our network, a few regional highlights include our Metro New York City, New England and Boston regions, which were each up more than 500 basis points in occupancy and 900 basis points in revenue in the fourth quarter year-over-year. Also, strong, were St. Louis, Sacramento and Tampa. As it relates to investments, we continue to be very active and acquired nine stores in the quarter for almost $115 million. Our total investment for the year was just over $530 million with the acquisition of 40 stores, 32 of which were managed by us as part of our joint venture portfolio and as such, our end markets we know well.

We grew several existing key markets by adding stores in the Greater New York City area, Philadelphia, Los Angeles, Tampa, Miami, Atlanta and Dallas, among others. 2021 is off to a good start, with 13 stores closed or under contract thus far, representing a total investment of roughly $200 million. We remain focused on building our portfolio in markets with attractive demographics and rates per square foot greater than our portfolio average. Our third-party management business had one of its strongest years, as more and more owners recognize our leading same-store performance and innovative technologies. On a net basis, we added 66 non-joint venture stores to our management platform, representing 38% growth for the year.

With regards to Warehouse Anywhere, we now have three micro-fulfillment centers in Atlanta, Las Vegas and most recently Chicago, and are actively working with our partner Deliverr on the next three to six locations. We believe our Warehouse Anywhere platform uniquely positions us to leverage our self-storage real estate assets to capitalize on the consumer shift for e-commerce and last mile delivery. And finally, we have reinstated guidance with a slight broader range than normal, primarily due to the COVID-related uncertainties as they relate to ongoing demand this year.

I'll now turn it over to Andy to walk through the details of the quarter and our outlook for this year.

Andrew J. Gregoire -- Chief Financial Officer

Thanks, Joe. Last night, we reported adjusted quarterly funds from operations of $1.07 per share for the fourth quarter, an increase of 11.5% year-over-year. Fourth quarter same-store revenue accelerated significantly to 4.9% year-over-year, up from just a 1.2% increase in the third quarter. Revenue performance was driven by a 310 basis point increase in average quarterly occupancy. Considering that we started 2020 with occupancy that was 30 basis points lower year-over-year, to finish the year with 330 basis points higher is amazing. Growing occupancy has been a priority for us, and our team has done a tremendous job adding customers to our platform. And occupancy is augmented by positive rent roll-up.

In the quarter, our move-ins were paying 4% more than our move-outs, which is a significant improvement from the rent roll-down of roughly 1.5% that we experienced in the same quarter last year. Same-store operating expenses increased only 1% year-over-year in the fourth quarter. Increases in repairs and maintenance, payroll and benefits, office and other operating expenses were offset by decreases in real estate taxes, utilities and marketing. Payroll and benefits included the impact of the $300,000 one-time bonus payment during the fourth quarter to select store team members who have been with us since early 2020 and worked tirelessly to adapt to rapidly changing operating procedures to keep their fellow teammates and customers safe and healthy.

Absent their payment, payroll and benefits would have increased only 70 basis points in the fourth quarter. The net effect of the same-store revenue and expense performance was an increase in net operating income of 6.8% for the quarter. Importantly, our balance sheet remains strong. We supported our acquisition activity and liquidity position by issuing approximately $140 million of common stock via our continuous equity offering program in the fourth quarter. We also filed a new $500 million continuous equity offering program late in the quarter.

In early January 2021, we issued approximately $94 million under the new program to fund expected first quarter acquisitions. Our net debt to recurring EBITDA ratio decreased to 4.5 times -- I'm sorry, to 5.4 times, and our debt service coverage increased to a healthy 4.7 times at December 31. At quarter end, our $500 million line of credit was almost fully available, and we have no significant debt maturities until April of 2024, when $175 million becomes due. Our average debt maturity remains over seven years.

Regarding 2021 guidance, we expect same-store revenues to grow between 3.75% and 4.75% for the 2021 fiscal year. Excluding property taxes, we expect other expenses to increase between 2.25% and 3.25%. While property taxes are expected to increase 6.7% to 7.75%. The cumulative effect of these assumptions should result in a 3.75% to 4.75% growth in same-store NOI. Consistent with our past practices, we are not including in our same-store group any stores acquired in the early stages of lease-up that were less than 80% occupied at market rates, as of the beginning of 2020. At 2021, same-store pool is expected to increase by 16 stores from 515 to 531 stores. And we do not expect this change to have a material impact on same-store growth rates.

We anticipate general and administrative costs to be between $56 million and $57 million. Growth in G&A relates primarily to improvements to talent and additional teammates to support our increased store portfolio, which grew by 8.5% in 2020. As a reminder, we allocate costs associated with management of our 3PM Portfolio to G&A. I anticipate investments for 2021 include approximately $400 million of acquisitions, expansions and enhancements of roughly $45 million, and investments in joint ventures to be between $20 million and $25 million. Based on these assumptions, we anticipate adjusted FFO per share for the 2021 year to be between $4.18 and $4.28.

And with that operator, we will now open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Today's first question comes from Juan Sanabria with BMO Capital. Please go ahead.

Juan Sanabria -- BMO Capital Markets -- Analyst

Hi, good morning, guys. And hope you're doing well. Just -- firstly, just curious if you could give us a sense the same-store revenue trajectory over the course of the year, may be a first half, second half split? And in particular, maybe how you expect occupancy and rate to trend throughout the year on the same-store perspective?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah. Sure, Juan. We had a strong fourth quarter. So we expect to start the year strong with the occupancies at the level they're at, rates are moving nicely, meaning street rates. You would expect the first half of the year to be very strong. Second half of the year is where we expect to return to normal. So our model, we expect to return to normal. On the second half, we would see occupancy actually below in the model below where it ended 2020. Rates will be strong in first half of the year. What happens in the second half, again we assume we go back to a normal seasonality, where we see occupancy decline from the summer months, some about 200 basis points from July to December. So that would be our expectation. That's how we've built it through the guidance. So hopefully, that helps show.

Juan Sanabria -- BMO Capital Markets -- Analyst

And what do you, I guess, consider normal in terms of rate, you kind of talked about the occupancy declines. If you could just give us a little bit more color?

Joseph V. Saffire -- Chief Executive Officer and Director

Sorry, I was on mute there [Technical Issues]

Operator

We have our speakers connection rejoin. Juan Sanabria if you could please restate your question. Thank you.

Juan Sanabria -- BMO Capital Markets -- Analyst

Hi, guys. Sorry about that. I'm just curious, Andy if you can give us a little bit more color on what normal means in terms of your rate expectations? You gave us some sense of occupancy with the seasonality in the second half, but if any more color on the rate would be helpful?

Andrew J. Gregoire -- Chief Financial Officer

Yeah, on the rates, where we saw them in the fourth quarter was where we saw rates up almost 5% for incoming customers, and we see them up 9% in January. We would expect in the second half into the year. So those would be more normal levels up to 3%, 4% in that range. So it's a low single-digit numbers is what we're assuming for rates in the second half of the year.

Juan Sanabria -- BMO Capital Markets -- Analyst

Great. And just my last question, in terms of geography performance, Joe you gave a little color at the beginning, but curious on what you're seeing from some of the cities that maybe are ahead of the curve in terms of reopening, in terms of demand and importantly, move-outs in. Any kind of lessen in terms of the return to work? how that's [Speech Overlap]

Joseph V. Saffire -- Chief Executive Officer and Director

To be honest, Juan. I think we've said it for the last couple of quarters now. It really has been kind of coast-to-coast in terms of terms of strength. I mean, even our lower lowest markets in terms of move-ins, Atlanta and Miami were up 11% each, so that gives you a sense of of just how robust the whole industry has been. So it really is a matter of who are the best performers versus where the weak ones are, because there really is no weakness. It's been pretty strong since obviously, things started to reopen in September, October, and it's remained that way.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thank you, guys.

Joseph V. Saffire -- Chief Executive Officer and Director

All right, thanks. Sorry about the..

Operator

Our next question today comes from with Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, thanks, good morning. Andy, then just following up there, just about your comments there suggesting a more normalized environment, I guess in the second half of '21 in terms of occupancy and move-ins and rates. Does that that imply that you might anticipate a good amount of demand that materialized during the last several months to vacate? And are you expecting same-store revenue and same-store NOI growth to potentially sort of flattened out or perhaps go negative in the second half of '21?

Andrew J. Gregoire -- Chief Financial Officer

Hey, Todd, we don't expect negative in the second half, we do expect low single digits in the second half. It's a tough quarter. We just had a great quarter, when you look at 4.9% revenue growth and 6.8% NOI. We have a tough quarter. Obviously, our investments in technology paid off early and how we were early adopters, and we think we gained more than our share this year. So we had a great second half of the year. And we just think when you return to normal and those students that have been with us now a year, those students are going to move out, right. So we're going to -- we're not going to have that again. How much of the housing activity was pulled forward, we have to assume some of them. So that's what we did in the model. And so you'll see, we expect in the model in the second half year to be very low-single digits, but we expect to stay positive for the second half.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And what's been -- it's been just a short period here, but what's been the impact if any related to the recent storms and the winter weather in Texas and some other markets in the south and sort of Sunbelt, I guess. Do you anticipate any impact in demand or pricing as a result?

Andrew J. Gregoire -- Chief Financial Officer

Typically, from this type of activity we will see some demand. We did have some damage and we had some customers -- we'll see some customer goods claims. We had some pipes burst, some sprinkler systems, nothing significant. But we do have some customers that obviously will be covered under their insurance -- our insurance program. So we'll have some extra claims there. But no significant damage to the buildings. We haven't seen the uptick in move-in [Indecipherable] pretty early. But we would, as is typical in situations like this, we expect to see some of that.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, got it. And just last question around the CMO portfolio had a big quarter, and the overall NOI yields right around 3.5%. There are some pretty strong occupancy gains in the quarter. A number of those facilities are now well into the 80% range, even a few that were, I guess delivered just about a year ago or so in 2019. How are the CMO deals tracking versus your original underwriting overall? And what's the expected stabilized yield expectation on that $300 million of spend?

Joseph V. Saffire -- Chief Executive Officer and Director

So Todd, they're really performing well from a physical occupancy point of view, above what we had thought. Now rates were lower most of 2020, so they were definitely coming in at lower rates than we expected and that's why you're not seeing the yield there yet. When we get the occupancy and rates stable, we believe there is over 6% yield on those seeable deals.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. How much yield upside do you anticipate in 2021 from that CMO portfolio?

Andrew J. Gregoire -- Chief Financial Officer

I don't have it in front of me, Todd. Sorry, I can't answer that question. Obviously, we expect improvement in the yield, but we're not going to go from 3.5 to 6. But I think you'll see some decent improvement in there, but I just don't have it in front of me.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, all right, thank you.

Joseph V. Saffire -- Chief Executive Officer and Director

All right. Thanks, Todd.

Operator

And our next question today comes from Alua Askarbek with Bank of America. Please go ahead.

Alua Askarbek -- Bank of America -- Analyst

Good morning, guys. Thank you for taking my questions today. So I just wanted to ask a little bit more on the expense side. I know you guys have talked about higher increases in taxes earlier last year, but can you just talk about which markets are driving those increases? And how we should think about the other expense item? And will there be any relief from marketing since occupancy is holding on strong?

Andrew J. Gregoire -- Chief Financial Officer

Sure. From a property tax point of view, we had some great wins in 2020, to end the year for a full year of only 3.%, much below what we expected. We challenge property taxes in Texas and Florida and won some nice appeals, where not only did we receive a reduced assessment, but we received more than $1 million back in assessment challenges from 2019, that the cash was received this year. So we had a great year from challenges, which makes it much tougher going forward. So that's why you see that bigger number in the property taxes in 2021, where we are expecting 6.75 and 7.75, it's a tough comp. So that's part of what you're seeing there from a property tax.

Marketing wise, I think you saw it in the fourth quarter, where we are -- then marketing was controlled. We would expect in the first half of the year in our model, we believe we can control marketing expense. In the second half, if we do see a fall-off in occupancy, you would see us increase that spending again. So overall, relatively flat on the marketing, slight uptick, but nothing like the over 20% what you saw in 2020.

Alua Askarbek -- Bank of America -- Analyst

I got it.

Andrew J. Gregoire -- Chief Financial Officer

Sorry. I don't think there is, it's pretty much normal. We've increased our employee pay 3% at the store level. R&M, we're looking at 3% increase. So we're doing some other initiatives to control other line items. But overall, we think, it's going to -- those other expenses will come in 2.25% to 3.25% range.

Alua Askarbek -- Bank of America -- Analyst

Got it, OK. And then just a little bit more on the Warehouse Anywhere and the Deliverr partnership. So, what markets are you guys looking for next? Or are you looking to expand more locations in the current markets that you guys already operating in?

Joseph V. Saffire -- Chief Executive Officer and Director

Hi, Alua. We are definitely looking at new markets. One, the one market we are in right now, Atlanta, that one we're looking to expand. It was smaller micro-fulfillment center. It's kind of reached capacity and we'll probably expand that one. These other two with Vegas in Chicago. It really just up and running and have some capacity. So the next markets we're working on, but I would expect them to probably be somewhere Dallas, LA, New York, Seattle or some of the cities that we're looking at, and we'll probably have some clarification in the next couple weeks, if not sooner. And probably look to rollout one or two in the next couple of months. And hopefully, three to six by the end of the year.

Alua Askarbek -- Bank of America -- Analyst

Got it. And then will you guys be providing a little bit more disclosure around the cities going forward? Like, when can we expect to see some more about that?

Joseph V. Saffire -- Chief Executive Officer and Director

On the warehouse Anywhere fees. Or just to kind of what you're doing there. Yeah. Yeah, as that grows, it's still a very small part of our business. Warehouse Anywhere fee income in total is about $6.6 million in the rent from that programing, but it shows up in the rental income line is about -- a little over $4.5 million, and that growth will break it out when it makes a more material impact on our results.

Alua Askarbek -- Bank of America -- Analyst

Okay, got it. Thank you.

Joseph V. Saffire -- Chief Executive Officer and Director

Your welcome.

Operator

Our next question today comes from Smedes Rose with Citi. Please go ahead.

Smedes Rose -- Citigroup -- Analyst

Hi, thanks. I think we're asking a little more about your acquisition activity, is obviously pretty active, coming out of the gate and -- Could talk about your thoughts around stabilized versus lease-up? I think in the past you focused more on stabilized more recently, and what you're seeing on the cap rate front and any change in your expectations around financing and acquisition? Should we still kind of a 50:50 split?

Andrew J. Gregoire -- Chief Financial Officer

Yeah, for sure. Hi, Smedes. For sure, you continue to see the 50:50 split that equity for acquisitions, yes. We've had a very good year. We've been very active. You've seen the results of what we've been able to close. A lot of it is hard work. We've been -- a lot of this that we've just announced is onesie twosies [Phonetic] roughly 90% of them are off market, 30%, 40% from our third-party management owners. So a nice mix. I think there is a mix of stabilized versus lease-up. I think some of the properties that we -- that may be qualified to stabilize, we're probably seeing a little bit of opportunity with expansion. So they're stabilized. But we look at kind of the potential that we can build in with some of our expansion and enhancement project. But overall, I think a lot of these are north of stabilized cap rate, north of 6%. Some of them reaching 7%. So a good mix. But I think the majority of them are mostly stabilized. But we have been adding in a few opportunities with lease-up, maybe one or 2 CMO deals. But yeah, just a good mix. And I would expect 2021 to be similar. Then take our underwriting and our model shows kind of a year one cap rate of 4.5, and then obviously growing from that.

Smedes Rose -- Citigroup -- Analyst

Okay. And then you added 66 net adds to your third-party management system, which I mean, would you look for kind of a similar number across the course of 2021? Or would you expect it to be higher or lower?

Joseph V. Saffire -- Chief Executive Officer and Director

I would hope so Smedes. I think we're obviously gaining traction, and our performance, our brand, the technology has really raised a lot of opportunities for us. We're definitely being noticed and we went in a good share for ourselves. And I would hope that would continue, I would think between 50 and 75 net is a reasonable goal for us for 2021.

Smedes Rose -- Citigroup -- Analyst

Okay. Thank you.

Operator

And our next question today comes from Ki Bin Kim with Truist. Please go ahead.

Ki Bin Kim -- Truist Securities -- Analyst

Thanks. Good morning. Just wanted to return back to the return to normalcy topic. When you look at the types of customers renting storage space from you guys, I'm curious if you're able to discern any trends and perhaps what percent of customers you'd think might relatively quickly start using self-storage once the vaccines rolls out further and the world returns back to normal?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah, Ki Bin, it is quite difficult. Even with pre-COVID, customers who come in, we asked questions, how long you going to be there, they might say three months and they end up staying for three years. It's pretty unusual. You never really get a straight answer. The sort of extended demand and higher occupancy levels is obviously something we're all benefiting from. We expected that this would -- that this would linger, as we said in earlier calls that this would linger up till, hopefully a peak season, and stay around for a while. But then it gets a little murky. We're not sure. That's what was part of the reason why we weren't able to reinstate guidance earlier. It's just so many moving parts. But for our model, we assume that there will be a return to normalcy starting in the second half of the year, maybe we're going to be wrong, hopefully we aren't. But really there's so many reasons why customers are using, a lot of it is home related, renovations, business activity so --and then obviously, there is businesses that are using us for things such as restaurants that may have shut the doors, they may reopen. So the good thing is, it's diversified and it's across all our MSAs, so -- but we do expect some return to normalcy in the second half of the year, maybe we'll be wrong. But yeah, it's not that easy to ascertain how long some of these new customers will stick around, and we'll see.

Ki Bin Kim -- Truist Securities -- Analyst

Got it. And when you look at your cities that had net migration in over the past year versus and city that had net migration out. Is there any kind of discernible trends in terms of how your portfolio trended?

Joseph V. Saffire -- Chief Executive Officer and Director

Not really. I think, and I guess if you're talking about net migration now, if that's New York or LA, obviously, our New York has been doing excellent. So maybe there were some folks who left the city for a while, but they stored their goods in New York, they're not bringing them with them. So that means they're going to return. Folks leaving California to Texas. Our LA markets is doing fine. So really nothing we can concretely point to in terms of that, except that there's just been tremendous demand for all sorts of reasons, for a lot of change, people moving, and all the reasons we've talked about in the last couple of quarters.

Ki Bin Kim -- Truist Securities -- Analyst

Okay, thank you.

Operator

And our next question today comes from Samir Khanal with Evercore. Please go ahead.

Samir Khanal -- Evercore ISI -- Analyst

Sure. Good morning. Just following up on the previous question on transactions. How much of the compression cap rates have you seen, especially in the secondary markets over the last year? I mean, you hear a lot about the primary market, are you seeing evidence of cap rates even below sort of 5% in some secondary market?

Joseph V. Saffire -- Chief Executive Officer and Director

Oh, yeah, for sure yeah. Yeah, for sure, Samir. I think, you are seeing more than four-handle. Interest rates are starting to move up. So that might help the cause there, but there's been an awful lot of demand, there was big portfolios out there with four handles on them. And we have seen some compression. But we've been able to find still some good opportunities. When you see a large portfolio go off, and sometimes there obviously is a typically 25 to 50 basis points premium, such as platforms involved. So you're going to have to take that kind of a wait from the comparisons. But we're still able to find some good stabilized opportunities with five-handle on them. But overall, I think we, you just need to be competitive into the pencils out [Phonetic] and it makes sense, where your cost of capital is. There's still some good opportunities, especially in some of the more desirable markets with higher rates and better demographics, you'll likely see high four caps.

Samir Khanal -- Evercore ISI -- Analyst

Got it. And I guess my second question is, can you just provide an update on your current views on supply? Sounds like that staying sort of a backseat at this point, right, as demand remains strong, but just curious on kind of what you're thinking is?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah. You know it's -- 2020 was a good year in terms of new supply. We expected 2020 was going to be a good year for us, heading into it pre-COVID. 2019 was the peak for our markets. And for sure, that held true. Not a ton of deliveries. Summer delayed because of COVID. What we're really trying to keep an eye on is the planning, what is going to become new planning given where the industry is. We started to see some indications of some new planning, but nothing that worries us. But I think we'll be watching that more than new deliveries. But overall, still our top market Houston is, we're not seeing much change there. We're still, obviously, absorbing some supply there in places [Indecipherable] The New York City region, there has been not a lot of deliveries in our markets, maybe two last year, but we would expect that to accelerate. We've been watching a number of facilities that have supposedly bidding construction, high teens. And will CMO's become deliveries in 2021.

Chicago has still has been a pretty good market for us. County taxes kind of scares many away. But again, with occupancy where it is, if we do see a return to normal, like we expect in the second half of the year, then maybe we shouldn't worry too much about new planning. But if it's an extended period of demand and some of this new demand becomes sticky, then I would expect the planning to increase. But it's something we watch. Right now I think, 2021 will be a pretty good year for us in terms of new deliveries.

Samir Khanal -- Evercore ISI -- Analyst

That's it from me. Thanks, guys.

Operator

And our next question today comes from Jonathan Hughes with Raymond James. Please go ahead.

Jonathan Hughes -- Raymond James -- Analyst

Hey, good morning. Going back to expense growth guidance, ex property taxes, that's expected to be up almost 3% this year. Have you captured all the low hanging fruit in terms of expense optimization and strategic efficiency initiatives that have been implemented over the past few years? I'm just trying to decipher how much of that guidance is conservatism? How much due to tough comps? If that's possible to separate the two?

Joseph V. Saffire -- Chief Executive Officer and Director

We're obviously. Hi, Jonathan. We're obviously striving to continue to be more efficient in everything we do. We still have our strategic initiatives. So that that low hanging fruit, again, some of that might be true in terms of some of the things we did with repair, maintenance and provided some new controls on that business and revisit it. But there are a lot of new things that we've been doing related to right Rent Now, ESG, such as more solar, going paperless, things like that, because they're going to continue to evolve.

We have some other projects that we're working on that I believe will help us control cost in the future. So whenever done, we're obviously, a innovative company. We have some other things that we feel we can continue to bring to the industry that we are looking at. But I think we feel good about the estimates that we put in for expense, still controlled.

Andrew J. Gregoire -- Chief Financial Officer

No, I think Jonathan, we saw some. Pleas go ahead Jonathan.

Jonathan Hughes -- Raymond James -- Analyst

No, you go ahead Andy.

Andrew J. Gregoire -- Chief Financial Officer

Yeah, I was just saying, we -- the pressure we see is insurance, property insurance. We see some pressure on that our policy renew soon. So we expect an increase there. But yeah, like Joe said, we're we're controlling very well, our payroll than some of the bigger line items. We can't control property taxes. We'll will find them as we did in 2020, and hopefully we can have some good results. But we have a tough comp there. But otherwise, there is not any significant increases were expecting in any particular line item outside of insurance, even Internet advertising should be pretty well controlled.

Jonathan Hughes -- Raymond James -- Analyst

Okay. Yeah, I mean, I don't mean to not appreciate what's been done in the past couple of years. I mean, the same-store expense growth, ex property taxes have been down 1.5% last year and 2% in 2019, so I know there are tough comps that have been created. So that's why I was trying to gain some more color there. But I appreciate the details? Sticking with expenses, can you just break down the G&A guidance in a little more detail? Or you expect that to be up 8.5% this year after being up about 12% last year? I guess what would that increase, or what would G&A expected to be if you excluded third-party managed G&A expense?

Joseph V. Saffire -- Chief Executive Officer and Director

So third-party is about 40% margin business, and I think, when you look at our 3PM revenue, you're talking the $17 million or so in management fee income. So you can back into how much of the G&A was related to third-party managed cost. The growth in that line is really the talent we're adding and the personnel, and to cover those additional stores. We do have our area managers in our G&A. So you see as we grow store count, you will see increased G&A from just a store count growth.

Jonathan Hughes -- Raymond James -- Analyst

Okay, all right. That's it for me. Thanks for time given.

Joseph V. Saffire -- Chief Executive Officer and Director

Thanks, Jonathan.

Operator

Our next question today comes from Spenser Allaway with Green Street. Please go ahead.

Spenser Allaway -- Green Street Advisors -- Analyst

Thank you. So thanks for the color on rate and occupancy expectations for '21. But can you guys provide a little bit of color on the portfolio turnover you're expecting for the year? And do you expect there to be a lot more elevated move-outs? Or a demand reversal coming out of '20?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah, Spencer, with our move-outs being down,10,000 less move-outs we had on the same-store basis in 2020. We have to assume that we're going to see a return to normal. So you would. We do expect more move-outs as we go through the year. We haven't seen it yet. With the increases in move-ins for the last 10 months, same-store had been up, we really haven't seen the move-outs yet. The model we're predicting that at some point this year, we do see elevated move-outs. There's not a whole lot more occupancy we have to gain. We do have some there. So I think it's a tough comp as we go through the year. You can expect occupancy to remain at 93% from July through December and into January as we did over the last seven, eight months. So I think, that's what we would expect, and that's how we modeled out the guidance.

Spenser Allaway -- Green Street Advisors -- Analyst

And then, just going back to the discussion on the significant kind of uptick in COVID-related demand from last year, do guys -- are you guys underwriting like a significant -- a significantly greater move-out or demand reversal in some of the larger markets versus some of your smaller ones, as people kind of return to apartments and normalized working environment?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah, it was so widespread in 2020 that we expect it to be widespread when it reverses. We don't see any particular markets where we're seeing any activity that would tell us that, yeah, there is a hint here that we're going to see some move-outs in this market versus that market. It was widespread coming in. Our expectation is that it would be widespread if it does return.

Spenser Allaway -- Green Street Advisors -- Analyst

Okay. That makes sense. Thank you.

Joseph V. Saffire -- Chief Executive Officer and Director

Thank you.

Operator

[Operator Instructions] Today's next question comes from Todd Stender with Wells Fargo. Please go ahead.

Todd Stender -- Wells Fargo Securities, LLC -- Analyst

Hi, good morning. Thanks. Back to the single portfolio. If rates begin on the low side, just for the CMO [Phonetic] deals, you're driving occupancy to those properties issue rental rate increases sooner than your stabilized stores? Year-over-year occupancies were pretty meaningful, just seeing how you let those run? Or do you raise rates in this?

Joseph V. Saffire -- Chief Executive Officer and Director

We do raise the rates pretty typically, probably a little bit slower than we do on our overall portfolio. Meaning, that first rate would go in six months after move-in and then some 10 months thereafter. So it's not significantly different, a little bit slower on the running, and we want to get that momentum and make sure that occupancy has great momentum before we start raising the rate. So very similar, but probably a few months delayed, I guess if you look at the overall, how we treat the CMO versus stabilized.

Todd Stender -- Wells Fargo Securities, LLC -- Analyst

Got it, OK. And then on the acquisition front, you indicated going in yields in the fours, but you can stabilize those into the sixes and even maybe reach seven. What kind of growth rate assume in your underwriting? And then how about the metrics compared to JV deals that you do?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah, I think on the, in the growth rates, if it's a stabilized store, we look at growth rates in the 3% range. When you're seeing anything where you see 6.5 to 7 yield on stabilization, that's a property that we bought early in the lease-up or at CMO. You won't see us buying a stabilized store at 4.75 and getting at the 7. That's not going to happen. On the stabilized store, we expect 3% growth. It's those CMO stores or early in the lease-up where we see that significant benefit on the back end as the yield increases as we develop those stores and may stabilize.

Todd Stender -- Wells Fargo Securities, LLC -- Analyst

For JVs, what kind of growth rates for JVs as well?

Joseph V. Saffire -- Chief Executive Officer and Director

Yeah, nothing unusual in our JVs. We did buy a lot of stores out of our JVs. So we were earning management fees out of those 32 stores that we bought through from our JVs in 2020. But the growth rate in our JVs is very similar. The stabilized JVs is very similar to our overall portfolio.

Andrew J. Gregoire -- Chief Financial Officer

Typically, our JVs at this point in the cycle will be more for an under development side. We don't do development, as you know Todd. And it will see a early lease -up for CO deals, and we have some pretty good JV partners that have more appetite for that type of asset will put those in similar to a lease-up store shouldn't really change. Again, our JV activity is not as active as previous years, just given where we are with our cost of capital. If we combine to rate, that's going to be a priority number one. But there is some cases, early lease-up, new development that we'll put into a JV.

Todd Stender -- Wells Fargo Securities, LLC -- Analyst

Great, thank you.

Operator

And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Joseph for any final remarks.

Joseph V. Saffire -- Chief Executive Officer and Director

Well, thank you everybody. I wish everyone a safe spring and hopefully, we're seeing the light at the end of the tunnel and we'll get back to you soon. Until then, we'll speak in a few months. Thank you.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

David Dodman -- Senior Vice President, Investor Relations and Strategic Planning

Joseph V. Saffire -- Chief Executive Officer and Director

Andrew J. Gregoire -- Chief Financial Officer

Juan Sanabria -- BMO Capital Markets -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Alua Askarbek -- Bank of America -- Analyst

Smedes Rose -- Citigroup -- Analyst

Ki Bin Kim -- Truist Securities -- Analyst

Samir Khanal -- Evercore ISI -- Analyst

Jonathan Hughes -- Raymond James -- Analyst

Spenser Allaway -- Green Street Advisors -- Analyst

Todd Stender -- Wells Fargo Securities, LLC -- Analyst

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